University Star

Students are having a difficult time paying back their school loans, according to an annual report released by the U.S. Department of Education.

The 2008 national cohort default rate represents the percentage of students who take out loans from their institutions and began repayment between Oct. 1, 2007 and Sept. 30, 2008, but who discontinued payments before Sept. 30 of last year.

Students have up to six months after they stop attending school at least half-time to begin paying loans. Students who do not pay loans, or “default” on a loan, are subject to legal action according to the National Student Loan Data System.

The national cohort default rate rose to 7 percent in 2008, up from the previous year’s 6.7 percent. Texas State reported a 3.3 percent default rate. Texas State’s rate in fiscal year 2007 was 3.9 percent, and 3.3 percent in 2006.

Crisselda Jass, assistant director of Financial Aid and Scholarships at Texas State, said borrowers are required to take entrance and exit counseling exams to gain loan eligibility. She said the exam prepares students to understand responsibilities. Students are provided support to help teach them how not to default on loans during these exams.

Jimmy Hoang, English junior, said he remembers the entrance loan exam, but still does not fully feel prepped for loan repayment after graduation.

“It is scary to think about,” Hoang said. “It is always in the back of your mind that you won’t be able to pay it back.”

As of the 2008 fiscal year, 5,746 Texas State students entered into repayment. Of those borrowers a total of 191 are in default, according to the U.S. Department of Education.

Jass said Texas State is proud of its lower default rate. However, Texas State ranks highest among surrounding schools. The University of Texas reported a 2.8 percent default rate and Texas A&M University at College Station stands at 3 percent. Texas A&M's financial aid representatives did not return request for comment.

Jane Glickman, U.S. Department of Education representative, said higher default loan rates are becoming a trend.

“When the economy is sluggish, we always see a tick in the default rate, because people are out of jobs and have difficulty paying their student loans,” Glickman said. “It’s between paying their rent and paying their loans.”

Texas has a statewide default rate of 9.1 percent with more than 75,000 borrowers in repayment, according to the U.S. Department of Education’s fiscal year 2008 Official Cohort Default Rates by State/Territory report. Of those borrowers, a total of 238, 852 students defaulted on their loans.

Students are not taking the economy into account when choosing majors and careers, Glickman said.

“We are concerned that students attending these schools are taking out huge amounts of tax payer money, and they aren’t training for jobs that later turn into employment,” Glickman said.

Thomas Melecki, director of Student Financial Services at the UT, said more students are trying to market themselves for better paying jobs. A total of 6,694 students entered into repayment in October 2007, and of those 192 defaulted, according to the U.S. Department of Education.

“We believe that a lot of our students are graduating, taking a look at the economy that’s out there, and saying, ‘I think I am going to improve my employability by going on to graduate school,’” Melecki said. “In turn, fewer of our students are entering repayment, and that is driving our cohort default rate up.”

Jacob Hancock, pre-mass communication junior, said he will never deal with default loans. He said most students know where they stand when they enter into loan repayment.

“I am fairly confident that I will have a job when I graduate and not have any trouble paying back the loans,” Hancock said.

Default loan rates are not only affecting students. Schools with default rates of 25 percent or greater for three consecutive years’ face possibly losing eligibility to give federal loans. However, no Texas schools were affected this year.